Housing: Low Incomes

Austin Mitchell: To ask the Secretary of State for Communities and Local Government what estimate she has made of the total capital receipts under the right to buy; what the effect of these in public sector borrowing has been; when the revenue received was spent; and what plans she has for the treatment of further revenues.

Iain Wright: The following table answers my hon. Friend's question for the years since 1995-96. Information before that year is available only at disproportionate cost.
	
		
			  £ million 
			   Housing capital investment supported by CLG  Right to Buy (RTB) Receipts  Set Aside/Pooling  Investment greater than set-aside/pooling 
			 1995-1996 (1)— (1)— 860 (1)— 
			 1996-1997 (1)— (1)— 637 (1)— 
			 1997-1998 1,894 890 943 951 
			 1998-1999 2,098 911 1,085 1,013 
			 1999-2000 2,173 1,374 1,477 696 
			 2000-2001 2,866 1,426 1,626 1,240 
			 2001-2002 3,312 1,566 1,382 1,930 
			 2002-2003 3,598 2,210 1,626 1,972 
			 2003-2004 4,685 2,936 No data n/a 
			 2004-2005 4,767 2,575 1,694 3,073 
			 2005-2006 5,106 1,544 1,067 4,039 
			 2006-2007 5,194 1,145 843 4,351 
			 2007-2008 (2)5,597 No data (3)770 No data 
			 (1) Information available at only disproportionate cost  (2) Programmed expenditure  (3) Estimated pooled housing capital receipts 
		
	
	The table shows the total capital receipts from RTB sales of local authority dwellings in England. The figures are net of discount and are as reported by local authorities.
	The table also shows the value of capital receipts set-aside from 1997-98 to 2003-04 (the last year in which the set-aside regime existed). Under this regime, with-debt local authorities were required to set-aside a proportion of the capital receipt generated by the disposal of a Housing Revenue Account (HRA) asset, for the repayment of housing debt. When set-aside exceeds RTB receipts, it is because set-aside includes a proportion of receipts from not only RTB, but also whole-stock transfers, non-RTB dwelling sales, and sales of other HRA assets such as housing land.
	When capital receipts from the sale of a Government-owned asset are received, the sales reduce public sector net borrowing in manner such that the amount of sales is equal to the amount of the reduction. To the extent that a proportion of these receipts are retained and spent by the local authorities through pooling or set-aside, then that spending will offset the initial reduction.
	Under the set-aside regime, with-debt authorities were free to use the proportion of their housing receipts that had not been set aside for any capital purpose they saw fit. Debt-free authorities were free to use the whole of their housing receipts for any capital purpose. The Department does not record when authorities actually spent these receipts.
	From 1 April 2004 set-aside no longer applied to most housing receipts. All local authorities, both with-debt and debt-free, paid over or "pooled" the same amounts to the Secretary of State which would have formerly been set aside. Until the introduction of the pooling regime, set-aside was the mechanism that allowed a proportion of housing capital receipts to be redistributed for investment elsewhere.
	When an authority set aside an amount, the need for central government revenue support for that amount of borrowing through HRA subsidy disappeared, thereby enabling central to provide support for borrowing elsewhere.
	RTB sales reduce public sector net borrowing and since receipts are cash and therefore interchangeable with all other capital receipts, they are not hypothecated to any particular spending at any particular time. However, the table shows that the Government have consistently invested more in housing than they have received in receipts. In 2005-06, the amount paid to Government from all housing receipts is estimated to have been nearly £1.1 billion. The amount invested in housing was nearly £5.2 billion, i.e. almost five times the amount received in receipts.
	The process of pooling is currently being reviewed as part of the wider review of housing finance.